Absolute Performance Standard – Definition

Cite this article as:"Absolute Performance Standard – Definition," in The Business Professor, updated September 21, 2019, last accessed October 26, 2020, https://thebusinessprofessor.com/lesson/absolute-performance-standard-definition/.

Back to: OPERATIONS, LOGISTICS, & SUPPLY CHAIN MANAGEMENT

Absolute Performance Standard Definition

An absolute performance standard refers to a gauge used in evaluating the performance of businesses as well as the employees. It is referred to as a standard for quality control that is unattainable. Its unattainability rests on the basis that it is more realistic in theory than in real life. The absolute performance standard seeks to measure how well and effective an organization is performing and how employees are also faring working towards the goal of the organization. When a business fails to meet the benchmark provided by absolute performance standards, it might need to improves its processes in order to be efficient and effective.

A Little More on What is Absolute Performance Standard

The Absolute performance standard is attainable only in theory and not in measuring the absolute performance of businesses. Attainability is one of the major qualities of performance standards, these standards should also be specific meaningful and applicable in measuring the quality, cost, quantity and aptness of organizations.

Diverse benchmarks or performance standards can be used by organizations. The evaluation of the performance of different segments of the organization can be done using the standards.

Reference for “Absloute Performance standard”

https://www.investopedia.com › Investing › Financial Analysis

www.businessdictionary.com/definition/absolute-performance-standard.html

https://thelawdictionary.org/absolute-performance-standard/

www.oxfordreference.com/view/10.1093/oi/authority.20110803095344915

https://www.shmoop.com/finance-glossary/absolute-performance-standard.html

Absolute Performance Standard

Does pay for performance increase or decrease perceived self-determination and intrinsic motivation?, Eisenberger, R., Rhoades, L., & Cameron, J. (1999). Journal of personality and social psychology, 77(5), 1026. This paper presents laboratory and field studies which examined the relationships of reward for high performance with perceived self-determination and intrinsic motivation. One of the studies found that pay for meeting a performance standard had beneficial effects on college students’ perceived self-determination and competence, expressed task enjoyment and free time spent performing the task.

Relative performance evaluation and risk taking in delegated investment decisions, Chow, C. W., & Haddad, K. M. (1991). Decision Sciences, 22(3), 583-593. This study utilizes a laboratory experiment to test the effect of relative performance evaluation on the risk-aversion of delegated investment decisions. The findings suggest that relative performance evaluation may reduce the reluctance of managers to adopt risky capital investments mostly in firms which operate in high-risk economic or technological environments.

Interrater correlations do not estimate the reliability of job performance ratings, Murphy, K. R., & DeShon, R. (2000). Personnel Psychology, 53(4), 873-900. This paper uses generalizability theory to show why rater variance is not correctly interpreted as a measurement error and also to show how these systematic rater effects can influence the reliability estimates and validity coefficients. It also presents conditions under which interrater correlations can either overestimate or underestimate reliability coefficients and also discuss the reasons for low interrater correlations.

Between-individual comparisons in performance evaluation: A perspective from prospect theory., Wong, K. F. E., & Kwong, J. Y. (2005). Journal of Applied Psychology, 90(2), 284. This paper investigates how between-individual comparisons affect performance evaluations in rating tasks. It demonstrates a systematic change in the perceived difference across rates as a result of changing the way of expressing performance information. The paper also draws upon prospect theory to offer a theoretical framework that describes the between-individual comparison aspect of performance evaluation.

The impact of performance-contingent rewards on perceived autonomy and competence, Houlfort, N., Koestner, R., Joussemet, M., Nantel-Vivier, A., & Lekes, N. (2002). Motivation and Emotion, 26(4), 279-295. This article presents two studies that examine the impact of performance-contingent rewards on perceived autonomy, competence, and intrinsic motivation. The results of these studies aid in resolving the Cognitive Evaluation Theory and Eisenberger Rhoades different position on the impact of performance-contingent rewards on autonomy.

Was this article helpful?